Will *any* mobile OS emerge dominant by 2015?

Funny, but China doesn't have any problem with payment plans, which is the lynchpin of my argument that Apple will continue to expand sales in the future.

I'm not ignoring the fact that iPhones are expensive either as I also said Apple would be able to sell more of them at $450 than $650; trivially it's also true that they will sell more at $350 than $450 as well.

The issue isn't then the price or the payment plan, it's if Apple will be able to convince more people to buy an iPhone every year or not. That is not something we can predict. An example is the whole Nexus 4 fiasco.

39,9% of chinese live under $2.5 a day, 71.6% under 5$ a day. China is huge, but it is full of low income people. Factory workers in China earn less than $4000 a year. A iphone would take a months pay. Your lynchpin is broken.

So you're saying that China will never become prosperous or rich, iPhones will never drop in price, Chinese people will never connect to the internet, and Apple will die?

Let us put it in comparison. The average US income is about $40k, ten times higher than the factory worker in China. The average car in the US is about $30k. By your logic, no one in the US would be able to afford a car because it takes 9 months of pay to afford one, and then you still have to pay about $6 a day to operate it.

Yet we have, per capita, about 3 cars for every 4 people. Why is that?

1) Used cars are cheaper than new cars; older iPhones are cheaper than new iPhones, and used iPhones cheaper still2) Cars are normally bought using payment plans. Instead of paying $30k, you put down $1.5k, pay 6% in interest, and pay it off in 5 years. So instead of paying an iPhone off in a month you put $45 down, pay 6% in interest, and pay it off in 3 years.3) Cars are not all $30k; some new cars are available for as low as $15k. Not all iPhones are $600; the lowest end iPhone is available for $450.4) The US average income has grown with time. The same will be true of China over the next 5 years.

If what you believe is true, no one would be able to sell phones in China and no one would be able to sell cars in the US!

Not everyone will get a new iPhone; my past three cars, for example, have all been under the $30k mark (one as low as $10k thanks to buying used!) Some will decide their money is better spent on a $150 Android phone.

But, like in the US, some will decide their money is better spent on a $300 used iPhone or a $450 older iPhone.

The issue isn't whether hundreds of millions of people in China can afford to buy iPhones (they can), is if Apple can succeed in convincing them that they should.

No but the vast, vast, vast exclusive lead is on the iOS side. The games that are Android exclusives are barely worth mentioning. Mainly grey-area bullshit. No game dev worth a damn is going to ignore iOS. Can't say the same for Android.

There are lists of Android-exclusive games that you can easily find online (I don’t see Word Hero in the iOS App Store – kinda surprised about that). However, as a user of both Android and iOS, I must say the gaming’s better on iOS. I haven’t found anything similar to Ravenmark (turn-based strategy) on Android, and I have run into games I’ve played on iOS that appear to be poorly-written, poorly-performing ports on Android. I thought it was ridiculous that FIFA 12 for Android came out months later than on iOS, and incomplete.

Earning potential on Android must be catching up by now. The only complaint I regularly hear from developers is that customer support is less work on iOS.

@carlismo: There were several things holding Android gaming back, such as the inclusion of in app purchase in 2012 (Apple I believe had it since 2010), a 40mb size limit (Apple had 2GB I think) only recently pushed up to 400mb, with 2GB bundles, and a couple other things such as lack of real install base with a powerful GPU up until 2012.

Funny, but China doesn't have any problem with payment plans, which is the lynchpin of my argument that Apple will continue to expand sales in the future.

I'm not ignoring the fact that iPhones are expensive either as I also said Apple would be able to sell more of them at $450 than $650; trivially it's also true that they will sell more at $350 than $450 as well.

The issue isn't then the price or the payment plan, it's if Apple will be able to convince more people to buy an iPhone every year or not. That is not something we can predict. An example is the whole Nexus 4 fiasco.

39,9% of chinese live under $2.5 a day, 71.6% under 5$ a day. China is huge, but it is full of low income people. Factory workers in China earn less than $4000 a year. A iphone would take a months pay. Your lynchpin is broken.

So you're saying that China will never become prosperous or rich, iPhones will never drop in price, Chinese people will never connect to the internet, and Apple will die?

Where did I exactly say that? I said that there isn't enough people on earth with big enough income to support 381 million yearly iphone market 2017.

Or is it your opinion that apple will die if they can't sell 381 million phones 2017?

OrangeCream wrote:

Let us put it in comparison. The average US income is about $40k, ten times higher than the factory worker in China. The average car in the US is about $30k. By your logic, no one in the US would be able to afford a car because it takes 9 months of pay to afford one, and then you still have to pay about $6 a day to operate it.

Im using the best guess of how long people are willing to spend for a phone. With your logic the best selling phone in US would be Vertu as it costs about a months pay, and you're claiming people are more than willing to use that much money on a phone.

There is a difference in how many working hours people are willing, and able, to offer for whichever product. Also the people with average income don't buy cars with average new price as there are people who can't afford new cars. That will shift the average priced car out of reach of a average income individuals. In average.

OrangeCream wrote:

Yet we have, per capita, about 3 cars for every 4 people. Why is that?

1) Used cars are cheaper than new cars; older iPhones are cheaper than new iPhones, and used iPhones cheaper still

So some of those 381 million iphones are going to be used when they leave factory?

OrangeCream wrote:

3) Cars are not all $30k; some new cars are available for as low as $15k. Not all iPhones are $600; the lowest end iPhone is available for $450.

And there are even lower priced phones people buy. Why use 30k car when you are comparing it to expensive phone. In Monaco a average car is about 100k new. So why isn't the average car in US 100k?

OrangeCream wrote:

4) The US average income has grown with time. The same will be true of China over the next 5 years.

Yes, but it can't grow that much in that short time to make the 381 million figure even remotely possible. China would price themselves out of world economy and manufacturing would move to India where 96% of people live for less than 5$ a day.

OrangeCream wrote:

Not everyone will get a new iPhone; my past three cars, for example, have all been under the $30k mark (one as low as $10k thanks to buying used!) Some will decide their money is better spent on a $150 Android phone.

But, like in the US, some will decide their money is better spent on a $300 used iPhone or a $450 older iPhone.

The issue isn't whether hundreds of millions of people in China can afford to buy iPhones (they can), is if Apple can succeed in convincing them that they should.

The issue is if hundreds of millions of people in china are willing to use more than a months pay to buy a phone instead of a car, bicycle, house, refrigerator etc. I really don't think so. They have plenty of more affordable alternatives and plenty of more prudent uses for their money.

How many people in western countries are willing to buy a phone that costs more than a months pay? Some, but not that many. They too have more prudent uses for their money.

ps. The time people are willing to spend to get an item differs between items, but if you look at cars lifetime an average age of US car is about 10 years. So that would mean the car lifetime is about 20 years. Divide that 9 months pay to 20 years, and you will get half a months pay per year, less than you claim people are willing to use for phones.

Hey, my logic allows me to sleep at night owning aapl stock at $500. It's not horrible logic. In the US it would appear people are comfortable spending 10% of their annual income per month for 5 years to own a car that averages 10 years of useful life.

$20 a month for 2 years on a phone that Apple supports for 3 years and can last for 4 or 5 years is certainly affordable for someone earning $6k, again the problem is Apple to convince them to spend the $20 instead of $7, which I believe would mean Apple only gets 10% of the potential market.

However, 5% of 800m is still 80m, and as income goes up so will Apple's marketshare.

So it is not out of the question that Apple can average 30% of the 800m given how many more people there are above that. They already have 18% or so I believe at the $650.

Orange, it's not realistic to expect a 381 million yearly iphone market globally, at least with their current model. That would mean 800 million worldwide buying an iphone each two years, on top of people buying used.

At apple's current marketshare of 20% this would mean in 4 years time 4 billion people, or say 50+% of the world population is on a 2yrs average smartphone plan. I know some are on a one year plan or buy multiple phones but OTOH some buy a smartphone and use it for three or more years, or buy it used. So averaging out on 2yrs for all smartphone users i think is already rather optimistic, especially for the lower income groups where growth now needs to come from.

But to get back at that 20% marketshare, this is heavily skewed as apple's market share in some countries, most notably the States is around 40% (because of the specific subsidy system and some other US specific reasons). In most developing countries and even some richer european countries, the iphone's market share is closer to 10-15%. To maintain their 20% market share they would need to increase their market share in the 1st world and the 2nd/3rd worldcountries alike. This may sound counter intuitive, but as the volume shifts to countries where they have less marketshare they need to increase it nearly everywhere just to maintain their current overall position.

How realistic is it to think the chinese consumers now contemplating to buy a smartphone will go for the most expensive option? Some might, becasue the status of the iphone is important to them. But realisticly, and the figures support this, this is a relatively small group. So most growth needs to come from the chinese urban middleclass, and with annual growth around 8%, grosso modo and long term this means yoy there are 8% extra "potential" buyers for the iphone. This, of course after the market saturation of smartphones has happened. This is a process that happened around one year ago in europe / japan / the states/ and will probably happen in one or two years in china too. After all, with over 200 million smartphone users already and 300% yoy growth, you'll hit the wall rather quickly.

Now, that said, i do think apple will be able to maintain their overall marketshare (so actually increasing it in most) if they are willing to offer a lower entry model with today's specs (the so called plastic iphone 5) for around 300 - 375 usd/eur, and lower prices accross their line with about 100 usd. As it now stands you pay more than double for an iphone 4s outside the states (575 euro) then an even better specced and premium built aluminium Sony Xperia P (about 275 euro).A 100% premium was something they could maintain when iOS was more polished and had a vast app advantage. But with both advantages mostly removed, Apple is on shaky grounds with there current pricing model and product portfolio going forwards if they dont adapt to the changing market soon (which BTW nearly everyone expects them to do this year).

So, to recap, Apple's only real choice is for more share and less revenue per phone, at least in terms of a growth story that's substantial.

But, the unclear item is "what happens to profit"? I'm assuming Apple still doesn't want to get its hands dirty fighting it out (they didn't with the mini, for instance).

As you move down market, maintaining a premium price is a neat trick. I can see it in what they did for the mini. It's harder to see for the phone where Android has always been more competitive.

So, what Apple decides about its margins as it moves downscale will be an interesting exercise in profit maximization. But, it's instincts are always to err on the side of higher prices.

But, I agree, I don't see that Apple has a lot of choice but to figure out how to go downmarket if it is interested in earnings per share as opposed to earnings per handset.

Still, this doesn't seem to lead to the kind of performance we've become accustomed to seeing and that reality is probably reflected in the stock price to some degree.

What will be really interesting in this (especially outside of the US) is what the turnover rate is. Will the entire world repurchase phones every two years? There's already pressure on that model on the subsidy model in the US and it isn't as big a factor elsewhere.

I don't see that much going on in the phones to justify people doing that kind of turnover. It may happen for a while, but I don't see most people treating it like a game console they simply have to upgrade as soon as possible. For what people are asking of these phones, outside of games, I don't see a lot of inherent pressure to upgrade.

Speaking for myself, it's network performance that I notice and a phone with four cores isn't going to help me much with that.

Just a clarification: market saturation in china is different from those in developed 1st world countries. Market saturation is when everyone that can afford a specific product, has said product; be it a TV, PC or mobile phone.

Market saturation for the west is roughly 90% of the target population (between 8 and 75 yrs), with the remaining 10% not willing or be able to afford a smartphone. So in total about 80% of the population. In China however, market saturation will be reached much earlier, for arguments sake when nearly all urban adults have one. That would be roughly 40% of the population (with still significantly less disposable income compared to the west). From that point forward, growth needs to come from growth in wealth making it affordable to an increasing amount of people, not from adoption of a new technology itself.

No but the vast, vast, vast exclusive lead is on the iOS side. The games that are Android exclusives are barely worth mentioning. Mainly grey-area bullshit. No game dev worth a damn is going to ignore iOS. Can't say the same for Android.

Right--they exist. Their quality is an opinion.

Actually...tons of game devs ignore iOS and focus on where the big money is (consoles and PCs). However, right now--yes if they are going after mobile they won't ignore iOS, and maybe even lead there or only there. The difference that you seem to ignore is that it is changing. Look at it 2 years ago and compare to today...if you tell me that it is the same, then you would be a liar.

@carlismo: There were several things holding Android gaming back, such as the inclusion of in app purchase in 2012 (Apple I believe had it since 2010), a 40mb size limit (Apple had 2GB I think) only recently pushed up to 400mb, with 2GB bundles, and a couple other things such as lack of real install base with a powerful GPU up until 2012.

Sounds to me like you are saying things are getting better and 2012 was a big year of improvements to android.

How many pages now have I been talking about a $450 iPhone 5 and $350 4S now?

that would mean they follow their current course with iphone 4s instead of iphone 4 at same pricing levels. The rumours are about a cheaper iphone 5 at that price level, and this is also what is needed if they want to retain their global position for the reasons i explained.

Market saturation for the west is roughly 90% of the target population (between 8 and 75 yrs), with the remaining 10% not willing or be able to afford a smartphone. So in total about 80% of the population. In China however, market saturation will be reached much earlier, for arguments sake when nearly all urban adults have one. That would be roughly 40% of the population (with still significantly less disposable income compared to the west). From that point forward, growth needs to come from growth in wealth making it affordable to an increasing amount of people, not from adoption of a new technology itself.

The lion's share of smartphone growth in China is from rural poor areas, not the urban middle class.

How many pages now have I been talking about a $450 iPhone 5 and $350 4S now?

that would mean they follow their current course with iphone 4s instead of iphone 4 at same pricing levels. The rumours are about a cheaper iphone 5 at that price level, and this is also what is needed if they want to retain their global position for the reasons i explained.

That would mean apple would drop profit per phone to about half. To be financially sound they would have to more than double shipped units which may not happen. I really doubt they are going to do that as they all ready have trouble from shifting from cool guy to mom and pap image.

It would also be a bad precedence, it would put expectations on what next generation phones were priced. It's easier to go down on price than to go back up.

The head of French telecoms operator Orange said on Wednesday it had been able to impose a deal on Google to compensate it for the vast amounts of traffic sent across its networks.

Orange CEO Stephane Richard said on France's BFM Business TV that with 230 million clients and areas where Google could not get around its network, it had been able to reach a "balance of forces" with the Internet search giant.

Richard declined to cite the figure Google had paid Orange, but said the situation showed the importance of reaching a critical size in business.

Network operators have been fuming for years that Google, with its search engine and You Tube video service, generates huge amounts of traffic but does not compensate them for using their networks.

How many pages now have I been talking about a $450 iPhone 5 and $350 4S now?

that would mean they follow their current course with iphone 4s instead of iphone 4 at same pricing levels. The rumours are about a cheaper iphone 5 at that price level, and this is also what is needed if they want to retain their global position for the reasons i explained.

I use those products as exemplars. A 4S is still a solid entry level phone today.

How many pages now have I been talking about a $450 iPhone 5 and $350 4S now?

that would mean they follow their current course with iphone 4s instead of iphone 4 at same pricing levels. The rumours are about a cheaper iphone 5 at that price level, and this is also what is needed if they want to retain their global position for the reasons i explained.

I use those products as exemplars. A 4S is still a solid entry level phone today.

It isn't priced as one, 549$ unlocked. In US customers may think its cheap, but anybody buying it unlocked wouldn't.

I really hope a reporter gets to the details of that story, between this and France's demands on tech companies to start paying a tax to media companies for appropriating their content, we might be at the start of some crazy new initiatives. Hell of a precedent being set, super curious as to why Google agreed to it.

What is wrong with you? How many pages of repetition does it take for you to understand I'm talking about a $350 4S class iPhone?

I think I answered that first question earlier, but it seems I'm not allowed to. Maybe somebody else can. I mean, it's pretty [redacted].

The question of how many iPhones can be sold in developing markets like China is complex. Pricing, telco offerings, buying power, economic development/recovery, competition, image and so on all factor in.

While correct, Google won't manufacture enough N4 for it to be relevant to the discussion.

Apple has been charging a premium now for decades even when you consider the $49 iPod shuffle or $99 Apple TV or $199 iPod touch. $350 for an iPhone 4S level phone is unreservedly more expensive than an unavailable $299 Nexus 4 or an entry level phone, but so what? When has paying a premium for Apple products been a show stopper? It's a very successful business model and is not out of place here.

While correct, Google won't manufacture enough N4 for it to be relevant to the discussion.

Apple has been charging a premium now for decades even when you consider the $49 iPod shuffle or $99 Apple TV or $199 iPod touch. $350 for an iPhone 4S level phone is unreservedly more expensive than an unavailable $299 Nexus 4 or an entry level phone, but so what? When has paying a premium for Apple products been a show stopper? It's a very successful business model and is not out of place here.

2 things. By the time apple releases 6/5S to make 4S as apples lowest priced phone google may have gotten Nexus 4 manufacturing to the level where it is big enough for demand. Secondly 350$ is 100$ lower than apple asks for cheapest phone. I doubt they are going to do such a drastic drop, especially as they are going to retiring the 30 pin connector. Would be counterproductive to sell a lot of devices that use zombie connector.

$350 is only $25 lower than the outgoing 3GS from last year so it's not some impossibly low threshold for Apple to hit.

Also, I expect Apple to redesign the 4S to use a Lightning connector while also reducing its manufacturing cost. I cannot predict when they do so, any more than when we can predict Google gets more than a quarter million N4 a month. I'm on record as thinking they were going to ramp to a million a month and two months later it hasn't happened.

$350 is only $25 lower than the outgoing 3GS from last year so it's not some impossibly low threshold for Apple to hit.

Also, I expect Apple to redesign the 4S to use a Lightning connector while also reducing its manufacturing cost. I cannot predict when they do so, any more than when we can predict Google gets more than a quarter million N4 a month. I'm on record as thinking they were going to ramp to a million a month and two months later it hasn't happened.

Instead T Mobile has started selling it for $500 or so.

Not going to hold my breath for 4S getting lightning connector. That would probably need another SoC that support the connector, and other changes. Would be easier to start from clean sleet.

As for 3GS price, wasn't that a clearance sale of old stock? Then there isn't much of a chanse 4S getting similar price while in production. Might get similar clearance sale when 6/6S/7 is released, but only for remaining stock.

The 3GS and 4 are also largely the same though the 4 is clocked higher, possibly in improve its ability to drive the Retina display. The chassis is new though.

Hmm? The 3GS used a commodity Samsung-designed SOC. The 4 used an Apple-designed A4. Probably Apple licensed some bits of the A4 from Samsung, but AFAIK it was a more or less complete redesign. Surely, designing Apple's very first processor counts for something?

Not going to hold my breath for 4S getting lightning connector. That would probably need another SoC that support the connector, and other changes. Would be easier to start from clean sleet.

Apple built the chips for the thing right? They can probably build one that bridges into one of the on-SOC USB buses on the other side. A redesign would make sense eventually, but I don't see why they would have to do it right away.

The 3GS and 4 are also largely the same though the 4 is clocked higher, possibly in improve its ability to drive the Retina display. The chassis is new though.

Hmm? The 3GS used a commodity Samsung-designed SOC. The 4 used an Apple-designed A4. Probably Apple licensed some bits of the A4 from Samsung, but AFAIK it was a more or less complete redesign. Surely, designing Apple's very first processor counts for something?

As far as I can tell the A4 was very similar to the S5PC110A01, which was only an iterative revision of the S5PC100 used in the 3GS. They both contain a PowerVR 535, I believe, and the A4 is clocked 25% higher than the S5PC100.

There are visible silicon comparisons that show the S5PC110A01 has a nearly identical CPU, too.

The 3GS and 4 are also largely the same though the 4 is clocked higher, possibly in improve its ability to drive the Retina display. The chassis is new though.

Hmm? The 3GS used a commodity Samsung-designed SOC. The 4 used an Apple-designed A4. Probably Apple licensed some bits of the A4 from Samsung, but AFAIK it was a more or less complete redesign. Surely, designing Apple's very first processor counts for something?

As far as I can tell the A4 was very similar to the S5PC110A01, which was only an iterative revision of the S5PC100 used in the 3GS. They both contain a PowerVR 535, I believe, and the A4 is clocked 25% higher than the S5PC100.

There are visible silicon comparisons that show the S5PC110A01 has a nearly identical CPU, too.

So you think 4 are largely same?

OrangeCream wrote:

The 3GS and 4 are also largely the same though the 4 is clocked higher, possibly in improve its ability to drive the Retina display. The chassis is new though.

Lets have a look at the circuit boards, from ifixit:

They don't look even remotely same. A drastic drop in chip count, and with quick search I couldn't find single same chip. To me that doesn't look anything but major overhaul, a completely new circuit design.

Not going to hold my breath for 4S getting lightning connector. That would probably need another SoC that support the connector, and other changes. Would be easier to start from clean sleet.

Apple built the chips for the thing right? They can probably build one that bridges into one of the on-SOC USB buses on the other side. A redesign would make sense eventually, but I don't see why they would have to do it right away.

Building custom chips is expensive, slow process.

The problem, IIRC, with lightning connector is that it does some pin negotiation and shuffling, so you can't just hook up the USB directly there but need a chip to do the shuffling etc. It would be cheaper and faster to take a newer chip that supported the connector already, but then we are talking about building a completely new phone. Or in other words starting from a clean sheet.

There is the rumor from KGI Securities analyst Ming-Chi Kuo for a $350 plastic iphone 5 to be released this summer. I have the idea he's spot on, although i think the price would be more in the 350-400 region like the current entry model.

It would basically be the guts of the present iphone 5 but instead of aluminium would use polycarbonate for its body, thus becoming slightly thicker and heavier. This would mean they would have two current phone models they would need to update yearly, similar to the macbook / macbook pro when the macbook was still polycarbonate. The guts from last years' premium model would move to the entry model every year, so they'd have to stay in sync when there's a redesign.

This would make a lot of sense, they would be able to ditch the old connector a year earlier, move to 4" accross the board, have a more competitive entry model for the onslaught that will be the BRIC+ market the coming few years, against a total cost of manufacturing that would be roughly similar to the iphone 4s. Making a more compelling product as an entry model would mean the rest of your pricing should get more in line as well however, or you break the upgrade incentive chain (buying a more expensive model then you initially planned for). So I do think the rest of the portfolio will move downwards as well to about $750 for the top-end model.

The current speculation against AAPL is simply market pressure to change their tune and become more competitive or risk loosing their iOS platform advantage. John Gruber of course sees a conspiracy, but then again he also thinks the flat design trend in UI originated on the iOS app platform.